Council moves toward tax hike

Officials: Money needed for rising city pension costs

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STERLING – A resident with a $100,000 house would pay $41.64 more in property taxes next year under a city proposal. The money would cover increases in police and fire pension costs.

The City Council voted 5-1 Monday for a preliminary tax hike proposal, with Alderman Barry Cox dissenting.

Under the proposal, the city would increase its tax levy by 6.99 percent. Any increase more than 5 percent requires a public hearing before final approval.

Last year, the city’s contribution to the Police Department pension fund was $497,884; this year, the actuaries are recommending a contribution of $605,834, which is a 21.7 percent increase.

The city’s Fire Department contribution last year was $415,260. This year, that number will be $605,834, an increase of 21.1 percent.

The city is expecting three firefighters and one police officer to retire next year, increasing the likelihood for even higher contributions, according to the city.

City Manager Scott Shumard said that if the council rejected the tax hike, it should prepare to make cuts to next year’s budget, most of which will be personnel.

He said the state sets pension benefit amounts, retirement ages and employee contributions, so the city has little control.

Alderwoman Amy Viering said the pensions are a city debt.

“We have to pay it,” she said.

Shumard said the city’s long-term plan should be to seek home rule, which voters must approve. With home rule, the city would have more power to impose sales and food and beverage taxes.

With such taxes, some of the revenue would come from visitors to Sterling, not just residents, Shumard said. Now, city residents are solely responsible for fire pension funding, even though the Fire Department serves residents outside the city.

Cox said home rule could result in waste.

“Instead of saying we’re taking out of the right pocket, we’re taking out of the left pocket,” he said.

Mayor Skip Lee said a sales tax would spread out the burden.

Cox said the state needs to reform the pension system.

“Citizens have to go to Springfield,” he said.

After Cox voted no, Viering said she would like to know how those who voted no would solve the problem.

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